Bail-outs of distressed carmakers and component suppliers could cost the German taxpayer a two-digit billion Euros amount, analysts warned. But given the sector's importance for Germany’s entire economy, supporting the car industry's transition to sustainable mobility has become a top priority for the government.
Volkswagen, Daimler, BMW and others are likely to be among those calling for help the loudest, given that these carmakers are need to invest quickly into developing electric vehicle technology at a time when they still need hold back billions of Euros for looming lawsuits and fines over the dieselgate emissions fraud scandal.
"The industry won't have time to heal its wounds once the corona crisis is over," analysts said, suggesting some companies may well have to contemplate mergers to have revenue to invest into novel propulsion systems that comply with more stringent EU emission limits.
Production halts slash energy demand
The suspension of Germany’s industrial production in a bid to slow the spread of coronavirus has slashed the country’s energy demand.
Industry accounts for up to 45% of Germany’s electricity and natural gas consumption, according to the industry association BDEW, but measures to contain the virus, collapsing supply chains, and withering demand at home and abroad lead to a sharp decline in power consumption. Year-on-year power demand t declined by 3.5 percent on Thursday, March 19, and kept falling ever since.
Falling demand will likely cause a drop in wholesale power prices, with price projections for April ranging about 30% lower than one week ago. Likewise, lower power demand caused the EU's emissions trading price to drop from about €25 per tonne of CO2 at the beginning of the year to €15 last week.